Here are the main ideas being considered at the EU summit.
EU summit: growth, integration on the table
Leaders will discuss a proposal to move towards centralised banking and budget supervision, and a joint economic policy framework.
The proposal calls for a four-pronged strategy "towards a genuine economic and monetary union" that includes a "banking union", steps towards closer fiscal cooperation, deeper economic integration and measures to bolster democracy.
The proposal says a full-fledged fiscal union would ultimately entail the creation of a fiscal body for euro zone economies, such as a treasury office. It also calls for the examination of proposals on common debt issuance, an idea that Germany firmly opposes until other measures are in place.
The proposal suggests that the first steps need to be on creating a banking union, with further proposals expected from the European Commission in September.
The immediate aim of a banking union is not only to bolster supervision of major European banks and the broader banking system, but to break the link between highly indebted governments and bad banks, which has exacerbated the crisis.
Leaders will examine proposals that involve creating a single supervisor for systemic banks, a fund to wind down troubled cross-border lenders and a common deposit guarantee scheme to protect savers.
LOWERING BORROWING COSTS
Italian prime minister Mario Monti wants to negotiate a deal whereby the euro zone's rescue funds are used to help bring down the yields on government bonds of countries such as Spain, Italy and other that are respecting EU budget rules but still being punished by financial markets.
Part of Monti's aim, and one backed by Spain, is to loosen the strings attached to lending from the EU's rescue funds and allow them to recapitalise banks directly.
Leaders aim to approve a growth package promoted by French President Francois Hollande. The aim is to free up about €130 billion to invest in jobs, infrastructure projects and growth stimulus measures.
The EU hopes to pull together the money by redirecting development aid that has not been allocated to specific projects for the 2007-2013 period, as well as increasing the European Investment Bank's paid-in capital by €10 billion, a step that could create up to €60 billion more for investment.
The third pillar of the plan relies on so-called project bonds, which would involve public-private investment in major infrastructure projects, especially in the transport, energy and telecommunications sectors.
Leaders are expected to sign off on the European Commission's latest assessments of the bloc's economies and thereby make the budget recommendations binding. The step is part of the EU's annual "economic governance" programme.
Leaders will try to settle a dispute over the introduction of a single European patent, a move that would cut costs for inventors and industry but which, after more than three decades of debate, remains unresolved.